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You won't find these on the beach
As a way to fraudulently obtain loans meant for small businesses, fraudsters created fake or nonexistent companies, known as shell companies, to submit false business information such as how many employees they had or gross revenue.
Let's dive into the cases below.
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PRAC Fraud Task Force
Along with our law enforcement partners, we led an investigation that resulted in six individuals being charged in a $1 million Paycheck Protection Program (PPP) fraud scheme. It is alleged that the group created fake businesses and fake identities to obtain the fraudulent loans and deposit them into their own bank accounts.
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It's shelltime!
A financial advisor was sentenced to over three years for defrauding
the Economic Injury Disaster Loan (EIDL) program. Not only was he
found guilty of setting up shell companies of his own, but he also
reportedly posted YouTube videos advising others on how to defraud
the program. As part of his guilty plea, he forfeits three homes,
$1.6 million from personal bank accounts, and a Mercedes.
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Fleeing from fraud
A California man who pleaded guilty to setting up three shell companies
to obtain over $5 million in pandemic relief was sentenced to four years in federal prison. He allegedly formed or acquired three shell companies with no operations and claimed they employed dozens with payrolls in the millions. In reality, none of that existed and he instead used the funds for luxury properties. After his initial arrest, he tried to abscond from the
United States to Mexico.
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He sets up shell companies by the seashore
A Los Angeles man was indicted on allegations that he fraudulently
obtained over $3 million in pandemic relief by setting up four shell companies to collect the funds. He also allegedly used several aliases
in order to perpetuate the purported fraudulent scheme. The PRAC Fraud Task Force investigated this case.
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Fake companies, real consequences
In a multi-layered fraud scheme, a man was sentenced to seven years in prison and ordered to pay nearly a half million dollars in restitution.
Using multiple aliases and stolen personal identification information of over 50 people, he collected unemployment insurance claims from multiple states, and then set up various shell companies to create fake bank accounts to launder the money into. In total, he collected over
$2.6 million in illicit funds.
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 Oceans of fraud
In 2022, the PRAC released a report in which we found that, at the time, over 50% of PPP criminal cases involved applicants creating fraudulent applications by fabricating fictitious businesses and/or shell companies, claiming to have employees and an operating history when in fact no business or employees existed.
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Disclaimer: An indictment is a formal accusation of a serious crime. However, all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
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